UBS is somewhat of a false alarm…. but it is working to scare tax evaders

Windfall for CRA to the current tune of 7.6 million dollars and growing.
Some of you may know that I don’t have a lot of respect for the voluntary disclosure program because I am seeing that this can be guaranteeing your worst case scenario can really happen. VD as we have come to know it, is not that desirable. If you are not prepared for a full audit and if you don’t have all your ducks in order, you are just asking form more tax problems than you already have.

I don’t like offshore for evading tax…. I see offshore as for genuine business. If you are doing tax evasion…. it is not as simple as VD, if you are not doing tax evasion,,,,then simply don’t…. it is not a good idea…. Legal Tax Avoidence is quite another matter, but you need some serious advice to know the difference.

It also looks like the UBS deal is a great bunch of CRA propaganda to scare and bring offshore tax evaders in from the warmth to the frying pan.

Won’t you come into my parlour?, said the spider to the fly.

This is quite a situation…. read on to see wehat Gary Lamphier has to say…. very interesting reading.

Dan White

No teeth to tax watchdog’s war on cheats

CRA relies on ‘voluntary disclosures’

By Gary Lamphier, Edmonton JournalOctober 1, 2009

Back in August, I wrote a column that was highly critical of Jean-Pierre Blackburn, head of the Canada Revenue Agency.

“While the U.S. government has doggedly pursued Switzerland’s biggest bank (UBS) for helping a small army of Americans to dodge the Internal Revenue Service,” I noted, “the CRA has had zip to say about UBS’s well-publicized activities in Canada, or whether similar cases of suspected tax fraud are taking place here.”

My piece followed news of a watershed deal under which UBS agreed to cough up information on some 4,450 bank accounts held by suspected U.S. tax cheats. At one point, the accounts held $18 billion US of assets, or an average of more than $4 million each.

After years of haggling, the landmark U.S. accord finally punched a hole in the dam of Swiss bank secrecy. It followed an admission by UBS that it had taken part “in a scheme to defraud the U.S.” government by helping the bank’s rich clients evade the IRS. UBS agreed to pay a related $780-million penalty.

But let’s get back to Blackburn. My criticism of Canada’s chief tax collector seemed to hit a nerve.

After months of stony silence on the UBS issue, he suddenly emerged from his self-imposed cocoon, granting a flurry of interviews. He was also made available to me, although by then he had already stated his case to other reporters, so I declined.

In those interviews, Blackburn offered a stirring defence of his department’s plan to force UBS to spill the beans on its tax-dodging Canadian clients, just as the IRS had done with the bank’s U.S. clients.

Of course, U.S. authorities had already done much of the heavy lifting for Blackburn, helpfully identifying $5.6 billion of assets held directly by Canadians in UBS accounts in Switzerland, as far back as 2005.

The accounts were set up by UBS’s so-called “Canada Desk,” a clandestine operation of jet-hopping, suitcase bankers who bypassed the bank’s properly licensed Canadian subsidiary, directly wooing clients here in contravention of Canada’s banking laws.

Blackburn certainly talked a good game. He assured reporters the CRA was on the case, and its lawyers were ready to stare down the bankers from UBS, forcing them to disclose the names of Canadian clients.

“UBS tried to delay, but in the beginning of September, we will have a meeting between our lawyers and them to obtain that information,” he told Globe and Mail reporter Greg McArthur, who first revealed UBS’s secret Canada Desk last November.

“Is it a question of thousands of dollars or millions? I don’t know,” he said, in an apparent effort to play down the magnitude of the$5.6 billion of suspect assets already identified by U.S. authorities.

Fast-forward to Wednesday–the final day of September. In a bid to catch up on the progress of Blackburn’s campaign to lift the lid on UBS’s dubious activities in Canada, and its tax-cheating Canadian clients, I called Ottawa. Nope, the minister wasn’t available, I was told. But CRA spokeswoman Caitlin Workman gladly filled me in on the box score to date. I have to say, it’s not overly impressive.

Seems the CRA has managed to conduct just one meeting with UBS officials since Blackburn issued his declaration of war back in August. And although Workman couldn’t confirm it, the meeting was reportedly conducted by telephone, not face to face.

At present, no further meetings are scheduled, she added. She couldn’t explain why.

“It could be that we just don’t have a time yet. It doesn’t necessarily mean that there will be no more meetings, and the discussions are ongoing. But I’m just not at a point yet where I can say, ‘OK, tomorrow there’s a meeting.’ ”

In total, the CRA has received 57 “voluntary disclosures” thus far from Canadians who held accounts with UBS. “Of those 57, we have finished reviewing 20 of them. And from the 20 we’ve finished reviewing, we have assessed $7.6 million in unreported income, as of last Thursday,” she adds.

Got that? Of the $5.6 billion in reported assets secretly held by Canadian account holders at UBS in 2005–a full four years ago– the CRA has so far recovered$7.6 million of unpaid tax money. That’s a little over one-tenth of one per cent of the assets in question.

Upset yet?Hey, this gets better. For tax cheaters who hold money in such accounts, there is no legal means at present to compel them to come forward. Unless UBS discloses their names–which seems pretty unlikely–they could duck the CRA for years.

And if the cheaters do finally “come clean” half a decade from now, they won’t necessarily face any penalty for their tardiness, either.

“The minister has discretion to waive penalties for the previous 10 years,” Workman says. “For the entire period for which your (belated) disclosure is accepted, you will be free from criminal prosecution,” she adds.

“Because you’ve come forward voluntarily and been honest and above-board, even if belatedly, you won’t have the penalty owing, but will still have to pay the tax and the interest. It’s an incentive to come forward, and for the CRA, to recover that income.”

There you have it. Your tax-collection agency at work. Something tells me the lawyers for UBS and their tax-dodging clients aren’t exactly quaking in their boots.
© Copyright (c) The Edmonton Journal

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